Full Title: Reforming Residential Energy Efficiency Incentive Programs: Best Practices and Legislative Options
Author(s): Jack Teener, Lacey Tan, Olivia Prieto, and Russell Unger
Publisher(s): Rocky Mountain Institute
Publication Date: March 28, 2025
Full Text: Download Resource
Description (excerpt):
Dollar incentives for energy upgrades have enormous potential for impact. They can spur transformation by lowering up-front costs and making upgrades more accessible and appealing for households. And they can help drive wary contractors to recommend and install more energy efficient equipment such as heat pumps.
However, incentive uptake is not happening at the pace and scale needed to tackle the millions of poorly sealed and insulated homes that waste energy, raise costs, and rely on inefficient fossil fuel equipment. Incentive programs are needlessly complex, bogged down by excessive reporting, and burdened by ever-changing rules. Consumers can’t make sense of it all, and contractors are driven away. The impact is especially pronounced for low-income families, who often have less time and resources to deal with the complexity — making them one-third as likely to receive incentives than moderate-income households.
Regulators have strong incentives to be risk-averse, adding layers of complexity to prevent fraud that diminish ease of use. But there is a better way forward. The reward is an $97 billion lever to decarbonize US homes in the next decade, consisting primarily of $8.8 billion spent annually on existing state and utility electric and gas efficiency programs. RMI has developed resources to help stakeholders reform existing programs and develop effective programs from the start.